Filled with the scent of Gitanes and Pernod, it's a neighborhood spot where aproned waiters weave lazily between tables as traffic passes its terrace and regulars drop in like clockwork. The cafè, like many others, is beneath a frayed red awning, filled with clatter, gossip and glances; there is a dulled zinc-top bar, a round owner, carafes of cheap wine. But on closer examination, a visitor might notice the steady procession of clients to a back counter. And cafè tables don't wear this way through normal use, not without years of scratching pens.

Whether the event be galop, trot or obstacle, picking horses is more than just a pastime in France; it's a national passion. Film stars tout competing racing forms, and feature races are televised daily. The evening newscast routinely ends with the weather and handicapping tips. As many as 15 million bets—all legal—have been known to ride on a single daily race.

The French devote hours to sitting in cafès, and racing is a French passion that fits the cafè pace. With 7,000 cafè and tabac locations, France's Pari Mutuel Urbain (PMU) is the largest offtrack betting system in Europe, generating an annual handle of 35 billion francs ($6 billion). That makes PMU the seventh-largest service company in France. It draws one of every seven citizens regularly to a betting window.

The system was created in 1930 as a government-regulated consortium of 10 French racing societies. Today, PMU is a clearing house for bettors and breeders; it sets racing dates, makes odds and takes bets; and it distributes winnings through nearly 7,000 authorized outlets. PMU claims to redistribute 70% of its total handle to bettors. It retains another 5.5% for operating costs and contributes 6.3 billion francs ($1.1 billion) annually to government revenues. The remainder of the money goes "to the encouragement of horse breeding in France."

It is, without question, a wildly successful organization. And despite the image of a sleepy parieur (bettor) drifting into a cafè, filling out punch-card entries and setting down a 10-franc piece, it's technologically up-to-date. Within the last five years, PMU has spent millions to eliminate its old hand-processed system and recast itself into a high-tech organization. This new network—which uses high-speed computers, in-cafè terminals, satellite transmissions and electronic self-service installations—has increased French betting by 25% and allowed expansion into neighboring Monaco and Switzerland. PMU is currently negotiating the takeover of the ailing Belgian PMU system, and last month a French delegation was in Moscow examining the possibilities for a French-run PMU in Russia. It has also introduced cours-cafès.

Begun four years ago, the cours-cafès are sophisticated tele-theaters. There are about 150 of them now, concentrated mostly around Lyons and Marseilles, though a few have recently opened in Paris. These privately owned, licensed betting parlors are to the traditional cafè what a Ferrari is to the family Ford. There is an admission charge (up to 100 francs, about $17, depending on the location) and the plush decor is dominated by large-screen television sets.

"This spot is a lot cleaner, a little classier than the cafès or the track," says a young two-cigarette Parisian (one dangles on the lip, the other behind his ear). Around him, monitors advise bettors of the current odds and results while other screens are filled with replays of a previous race. Behind the cafè bar—between making sandwiches and drinks—a white-haired barman named Pelou studies the racing form. While serving coffee, he slips a word and a coin to a friend, who proceeds to the cashier's window in the back.

Leuthold von Oertzen, director of commercial operations for PMU, says, "Our biggest day is still Sunday. That's the day that Tiercè began in 1954, and the older players are more accustomed to playing on Sunday."

In the Tiercè, a bettor has to pick the first three finishers in a feature race. The bettor wins if the three horses he has selected finish in the first three, though his winnings are much larger if the exact order is picked. Today, PMU has a daily Tiercè and divides its pool among various types of horse racing—thoroughbred, steeplechase, harness. The specific race for a Tiercè is announced the day of the race, and the betting and payoffs for the nationwide pari-mutuel are enormous. Prestigious events such as the Prix de l'Arc de Triomphe at Longchamp or Le Grand Steeplechase de Paris at Auteuil are usually given priority.

"But not always," says the two-cigarette bettor, who complains that this day's Tiercè was switched from steeplechase's second-largest prize, the Prix La Haye Jousselin at Auteuil, to an earlier jumping event with a much larger and less distinguished field. A quick count of the Jousselin scratches on a nearby monitor reveals that if PMU had named that race and its diminished six-horse field as a Tiercè, millions of households in France would have collected.

"Jumpers," the despairing bettor says loudly. Calling out across the room, he asks, "Anyone know jumpers?"

No one replies immediately.

"My wife here," calls a voice from another table, "she says Rocker.... She likes the name." There is general derisive laughter. Pelou delivers an order, then lifts the two-cigarette bettor's pen and checks an entry. Winking, he says, "I give this to you."

The lights dim. The screen fills with images of horses at the starting line. On a judge's flag the call commences and a chorus of bettors shouts, "Allez! Faites vite!" As the pack races over Auteuil's course of bales and hazards, the voices in the cafè become louder. Words of encouragement are shouted in Italian and Arabic. At the far turn, an entry stumbles over a gate, and Pelou, running his hands through cropped hair, cries, "Ce n'est pas un cheval, c'est une chèvre!" ("That's not a horse, it's a goat!").

At the finish, the long shot, Rocker, is a late-arriving surprise, placing second. There are only three winners in the room, and the crowd resumes its study of the form. Watching his wife hurry to the window, the would-be tout grumbles, "Picking horses by names. Quel système!"

PMU also has a system for the bettor who would rather stay home. You can open your own betting account through the French in-home Minitel network and have your winnings/losses automatically recorded by an electronic banking system. "We all know that's the service of the future," says Von Oertzen. "And we're introducing a high-tech self-service machine nationwide [similar to one used by some U.S. tracks] into common-usage areas like supermarkets, theaters, railway stations, airport terminals."

Now, if they could only come up with a high-tech, surefire method of picking the winner.

PHOTOP. VAUTHEY/SYGMA

One out of every seven French citizens bets with PMU, many of them at the system's cafès.

Peter Mikelbank, a free-lance writer in Paris, plays the horses regularly, but without success.

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